Impact of working capital on large scale enterprises’ profitability

Abstract

The purpose of this research is analyzing the impact of working capital on profitability of Vietnam large scale enterprises in the period time from 2009 to 2014. In this study, we use multi-regression model to analyze panel data of 23 large scale companies. All of data was collected from audited consolidated financial statement. Precisely, the multi-regression model was applied between dependent variable represented by Gross Operating Profit; independent variables measured by Day‟s Sales in Inventory, Day‟s Sales Outstanding, Days Payable Outstanding and Cash Conversion Cycle; and control variables include Current Ratio, Debt Ratio, Financial Assets to Total Assets and Firm‟s Size. Thereafter, the researchers do detection tests to check the credibility of the regression results. Through using Eviews 8.1 software to analyze collected data, DSI, DPO, CR, FATA and LOS have positive correlation with GOP, while there are negative impacts of CCC, DSO and DR on GOP. Finally, the detection tests namely multicollineary, autocorrelation and Hetoroskedasticity have demonstrated the non-existence of these errors in the models we used.